how does google adwords address overlapping keywords?

Unlike my last random PPC related thought a few weeks ago about displaying multiple ads on a single Google search page, this week’s random moment is a little more deep and insightful.

How does Google determine which ad to display on overlapping keywords and am I being punished for the lack of common sense of other advertisers who use purely generalized or highly competitive keywords?

To clarify a little better, I want to use a real estate keyword themed example that should give an idea of what exactly I mean by the previous statement.

There are many competitive real estate themed keywords on Google, but none perhaps as competitive as “NYC apartments”, which also is a phrase found within many other keywords including “downtown NYC apartments”. So how exactly does Google determine which ad or keyword is triggered, if both of the previous keywords are being used in the same campaign, for the search query “downtown NYC apartments” since it contains both phrases? This page in the AdWords help center reveals the answer.

In order to determine how Google will select the appropriate keyword, you basically have to work your way through all of the scenarios to see what will happen. This almost reminds me of those “choose your own adventure books” from my childhood, but that’s beside the point. Sticking with this example of “NYC apartments” and “downtown NYC apartments”, Google will give preference to “downtown NYC apartments” because it matches the search query exactly.

This is all fine and dandy, but what if I’m only using “downtown NYC apartments” and all of the other advertisers are only using “NYC apartments” because they don’t see the benefit of using longer tailed keywords which typically have more relevance, are less competitive and thus less costly. If someone searches for “downtown NYC apartments”, I’m essentially competing against those advertisers only using “NYC apartments”. Theoretically, am I not going into a more competitive auction and likely paying more for this click?

I posed this scenario to AdWords Specialist Sarah N. yesterday in the chat excerpt below. Before reading I feel it is very important to say Sarah N. answered my questions beautifully. Keep up the good work Google in hiring very knowledgeable and personable people!

Andy: Not sure if (the Google help center article mentioned previously) answers this one though… sticking with my example, if I’m using the keyword “downtown NYC apartments” only and the search is “downtown NYC apartments”, I’m also essentially competing with other advertisers that are using only “NYC apartments”, correct? In addition, I understand that particular auction is unique but isn’t there a greater cost incurred on my part because of the staunch competition on highly used keywords such as “NYC apartments”?

Sarah N.: I see what you mean, with regards to other competitor’s keywords.  In that case, it will be based on your bid and your quality score.  Since ‘NYC apartments’ is a more general term, your competition will have to bid more, I assume.  In that case, it will come down to the quality score in combination with your bid.  On the other hand, your keyword will take some priority over your competitor’s keyword of just ‘NYC apartments’ because ‘downtown NYC apartments’ is that much more relevant to the user.  Does that make sense?

Andy: It does, but what does that translate into in regards to CPC? This potentially means because other advertisers may not use more specific keywords than a rather generalized phrase such as “NYC apartments”, I’m essentially paying the price for their inabilities? Not sure how else to word this without being so blunt.

Sarah N.: Sure, I understand what you mean.  I’ll explain further…

Andy: Thanks

Sarah N.: So the issue here is that, in reality, yours and your competitor’s keywords will both be eligible to enter the auction for that particular query of “downtown NYC apartments.”  Your keyword will have a slight advantage in that particular quality score evaluation because of the exact match.  From there, your ad rank is determined by your quality score and your bid.  Maybe some of your competitors have higher quality scores than you because of other factors involved in determining the quality score, and in that case, they wouldn’t have to bid as high as you for that ad rank.

Andy: In which case, I’d have to pay a higher CPC to achieve a similar position that would be achieved if only advertisers using “downtown NYC apartments” would be in the auction compared to this example, right?

Sarah N.: Well it depends on the historical click-through rate of that particular keyword.  If their historical CTR on is very high, thus achieving a very high-quality score, then you would have to pay more if your quality score is lower.

Sarah N.: The thing is that with such a popular search term, it’s going to be even harder to achieve a high-quality score because the competition is so extreme.

Sarah N.: It should be working in your favor to be using the more specific keyword, in this example.

Let me reiterate; AdWords Specialist Sarah N. explained this entire concept and line of thinking beautifully. Her last statement also reinforces the fact longer tailed keywords, in most situations, are favored and thus better than using more generalized keywords. This isn’t exactly something new to most PPC people, but it should be viewed as another reinforcement.

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